The Hindu Business Line : ‘Instant IITs no growth recipe’

As a populist move, one worse than the loan waiver for farmers, the Government wants to have instant IITs, forgetting that without a bank of dedicated teachers, that is impossible. The Government is behaving like a milkman who increases the amount of milk he sells by watering it, says P. V. INDIRESAN.

Karl Marx wanted the state to wither away altogether. Always realistic, Gandhiji put it better: he said the best government is the one that governs the least. We should be thankful to our politicians that in the past 15 years, they have steadily divested their power, so much so the Annual Central Budget no longer commands the awe it used to.

As expected, the latest Budget is designed to please voters. The proposal that impresses me most is the Central Plan Monitoring System, one about which voters would not care at all. Yet, it is perhaps the best innovation we have heard of in recent years, one that will have lasting benefits.

Monitoring system welcome

For long years now, our problem has been poor governance. After the Fifth Pay Commission, State governments had no money left after paying salaries for even normal administration. Hence, they diverted Plan funds wherever they could. They even surrendered Plan allocations as they had no resources to meet matching expenditure. At times, it must be sadly admitted, they were merely corrupt. Whatever the reason, there has been for some time a need to monitor Plan implementation. Hence, the introduction of the Monitoring system has been overdue.

Often, operations are bad only because the management system itself is bad. That happens particularly when officials at the operating level have no sense of ownership, have no autonomy to choose the best option as circumstances warrant. India is particularly notorious in that respect. In most States, district officials are helpless spectators of bad governance interfered with and influenced by corrupt local politicians. For that reason, some modern businesses, particularly in Japan, have given up inspection systems: Quality control is left in the hands of the operator. As Inspector Raj has earned notoriety in India, we should be careful when we install a new one.

Beyond fault finding

Apart from political interference, the prevailing system of financial control is by itself grievously faulty. We operate what is known as a ‘deficit financing’ system. The Centre undertakes the responsibility to fund whatever shortage of funds there may be after collection of income. On paper, that is generous; in practice, that is pernicious: It removes all responsibility and initiative from the hands of operating officials. If any official is zealous enough to generate more income than budgeted, all that extra is absorbed into the Consolidated Fund of India. Hence, there is no incentive to generate more funds, not to economise either. There is also next to no freedom to experiment. Every action has to be according to rules or according to precedence; innovation is a ‘No! No!’

It is against this background that we have to view this move to have a central monitoring system. Ideally, it should lay down only what the outcomes should be and not how that outcome may be achieved. It may go even further: Leave an option to modify the outcome if that is better for the local situation. Further, no option to experiment will succeed well unless it is accompanied by tolerance of failure. Let us hope the new Central Plan Monitoring System will not go the way of the other Central systems — the CAG, the CVC and the CBI — all of which are fault finding systems. Let us hope that, instead, it will be a research agency with a culture of enquiry ever attempting to encourage success rather than punish failures.

Pilot scheme, good augury

As he did last year, the Finance Minister has set apart Rs 10,000 crore under Plan B — to reward those government departments that meet performance targets. From the plethora of complaints one hears about failures of Plan implementation, apparently this reward has not had much impact. Neither the public nor the officials themselves get to know who all were rewarded and why. A reward that is virtually a secret is no reward at all. For this fund to have its full impact, it should get wide publicity. Publicity spreads knowledge about good practices; such knowledge is more effective than monetary rewards. In addition, there must be some scope for experimentation. In that connection, it is a happy augury that the governments of Haryana and Chandigarh have been permitted to operate a pilot scheme to implement a Smart Card for the distribution of the Public Distribution System. Ideally, several designs should be tried out to identify what will work best in the field. That may not happen because State governments too are rigid. Hopefully, Haryana and Chandigarh will try different designs and to that extent there will be some choice.

‘Saddest mistake’

To me, the saddest mistake is the move to build more IITs, IIMs and the like. India does need many more such institutions but is not yet ready. Great educational institutions are not built by money but by talented and dedicated teachers. Unlike financial capital, which can be obtained in a trice, human capital takes years to cultivate. As a populist move, one worse than the loan waiver for farmers, the Government wants to have instant IITs, forgetting that without a bank of dedicated teachers that is impossible. The Government is behaving like a milkman who increases the amount of milk he sells by watering it.

When IITs first came up, Pandit Nehru took great pains to attract the best available talent, including foreign ones. The present Parliament is doing exactly the opposite: It is insisting that teachers should be selected not for their ability but on the basis of their caste. The Finance Minister ended his Budget speech with a quotation from Pandit Nehru. I wish he had studied a little more that great man’s thoughts and remembered that soon after Independence, several State governments systematically destroyed their universities. Even Kolkata and Allahabad, which, in their heyday enjoyed the highest reputation across the world, were devastated.

The Centre is doing the same to IITs and the IIMs. It took 20 years for the IITs and the IIMs to establish their reputation all over the world. It did not take that many years for Kolkata and Allahabad to lose their sheen. Let us pray that the reputation of the IITs and the IIMs will survive a little longer and in the meanwhile a more farseeing parliament will rescue them from disaster.

The plus and minus

This year’s Budget is strong on finance and business growth but weak on human development. That is not the Finance Minister’s fault because human development is not his responsibility. Nevertheless, all the skills the Finance Minister brings to this Budget can be vitiated by the short-sighted, ill-conceived policies of human development.

This Budget gets top grades for micromanagement for an election due next year, but it is not Vision 2020. Vision 2020 is looking at the broader picture farther ahead. On that count, this year’s Budget needs some re-thinking at least on two issues. One, are loan waivers a cure or are they a virus that makes a one-time illness a chronic disease? Is not comprehensive crop insurance the real need? In an earlier age, Mr Janardhan Poojary banked on loan waivers and ruined banks. How will Mr Chidambaram avoid a repetition of that disaster? Second, the Minister should take a look at subsidies that are ineffective and breed corruption instead. There are several of them; they harm rather than improve election prospects.

(The author is a former Director, IIT Madras. Response may be sent to: indiresan@gmail.com)

(This 221st in the Vision 2020 series. The previous article was published on February 18.)

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